Determining financial advisor

Assignment Help Basic Statistics

Reference no: EM13101614

A financial advisor has recommended two possible mutual funds for investment: Fund A and Fund B. The return that will be achieved by each of these depends on whether the economy is good, fair, or poor. A payoff table has been constructed to illustrate this situation:

Investment Good Economy Fair economy Poor Economy

Fund A $10.000 $2,000 -$5,000

Fund B $6,000 $4,000 0

Probability .2 .3 .5

a) Draw the decision tree to represent this situation.

b) Perform the necessary calculations to determine which of the two mutual funds is better. Which one should you choose to maximize the expected value?

c) Suppose there is question about the return of Fund A in a good economy. It could be higher or lower that $ 10,000. What value for this would cause a person to be indifferent between Fund A and Fund B (I.E., the EMV's would be the same)?

Reference no: EM13101614

Questions Cloud

Imam dummie learns that giants shareholders rival : Imam Dummie learns that Giant's shareholders are contemplating a takeover of a rival. Mr. Dummie tells his wife about the possibility. His wife calls their broker who purchases shares in the target corporation for both her and her husband.

Show whether or not precipitate will form : Show whether or not precipitate will form in this process when the Ksp of Pbl = 9.8*10 -9

Explain making principled decisions : Tina is the chief financial officer for USA Products Corporation attempts to apply Christian precepts in making principled decisions and in doing business.

What will be the force : To charged dust particles exert a force of 3.2 * 10-2N on each other. What will be the force if they are moved so they are only 1/8 as far apart?

Determining financial advisor : A financial advisor has recommended two possible mutual funds for investment: Fund A and Fund B. The return that will be achieved by each of these depends on whether the economy is good, fair, or poor.

Creating joint probability table : A metropolitan school system consists of three districts-north, south, and central. The north district contains 25% of all students, the south district contains 4O%, and the central district contains 35%.

Apple products are innovative and speak for themselves : Apple products are innovative and speak for themselves but providing a platform that makes it easy for the customers to interact with them is a bigger plus."

Calculate the fraction of which is submerged : calculate the fraction of which is submerged when the cylinder floats in alcohol. Fraction of Vwood submerged.

Distinguished conceptually in organizational practice : This is no word limit in the assignment. It just has to make sense. No babbling to add extra sentences. How can racism as well as discrimination be distinguished conceptually in organizational practice? In your view to what extent as well as in

User Account

All Pages